DC Circuit Panel Grills Challengers, FCC on Title I Net Neutrality Reversal Case

Federal judges pressed both sides on the FCC's net neutrality rollback case in oral argument (audio) at the U.S. Court of Appeals for the District of Columbia Circuit Friday. It ran almost four-and-a-half hours, almost twice what was scheduled, plus a break. All three judges questioned challenger contentions the FCC erred in reclassifying broadband internet access as a Communications Act Title I information service, particularly given Chevron deference to reasonable agency decisions on ambiguous statutes, including 2005 Brand X affirmation of Title I cable modem service. Two judges questioned FCC decisions, including to scrap net neutrality rules -- particularly for public safety operations -- pre-empt state and local governments, and use Section 257 authority for transparency rules.

Judge Patricia Millett grilled FCC General Counsel Tom Johnson on agency defenses, repeatedly seeking further explanations. Judge Stephen Williams disputed most challenger lines of attack and sometimes offered defenses for FCC actions. Judge Robert Wilkins selectively questioned each side, in Mozilla v. FCC, No. 18-1051.

Santa Clara Country, California, got little pushback to its argument the FCC didn't consider public safety concerns in the elimination of rules prohibiting blocking, throttling and paid prioritization. Wilkins questioned why the FCC couldn't have fashioned a rule to provide special protections for authorities on public safety matters. Much of the argument focused on highly technical definitional issues about whether broadband is an information service or a Title II telecom service, which triggers common-carrier ISP regulation.

FCC Chief of Staff Matthew Berry noted the "Supreme Court has already affirmed the FCC’s authority to classify broadband as a Title I information service." After the argument, it still believes "the judiciary will uphold the FCC’s decision to return to that regulatory framework under which the Internet flourished prior to 2015 and is continuing to thrive,” he added in a statement. Republican FCC commissioners didn't comment to us.

Section 257

Attorneys for private challengers appeared to get some traction arguing the FCC didn't provide adequate notice or justify authority to impose transparency rules requiring ISP disclosures of network practices, which the agency says are critical to helping the FTC protect web neutrality. Harris Wiltshire's Stephanie Weiner, representing the Computer & Communications Industry Association and other intervenors, said improper FCC reliance on Section 257 was a "linchpin." Without mandated disclosure, the order must fall, said Kevin Russell of Goldstein and Russell, representing petitioners.

Johnson said Section 257 authority was a "logical outgrowth" of an NPRM, and to the extent there's a problem, it's "harmless error" as parties still were able to comment. Sidley & Austin's Jon Nuechterlein, representing ISPs backing the FCC, said if 257 authority is struck down, there could be a "narrow" remand, possibly to consider potential Section 706 authority.

The FCC order "is a stake in the heart of the Communications Act," said Steptoe & Johnson's Pantelis Michalopoulous, representing petitioners. He said the FCC had net-neutrality-like rules or policies for most of the past 26 years but no more. "You'll hear a lot about reasonableness and deference, but there can be no deference" when the FCC doesn't define "telecommunications," he said. Johnson countered that the Supreme Court in Brand X and the D.C. Circuit in 2016 and 2017 USTelecom rulings determined "that the FCC has authority to do precisely what it did do" in the current order. Petitioners are "simply trying to relitigate Brand X" and "second guess" FCC judgments on how best to protect the open internet and promote broadband network investment, he said.

Nuechterlein said ISPs have incentives to treat consumers well and there's no ISP track record of "mischief," including under the Title I regime before the 2015 Title II net neutrality order. He said it's "striking" how few incidences of blocking or throttling there have been. Millett suggested it's unclear if ISPs were temporarily on good behavior and biding their time until the regulatory landscape clarified.

Attendees React

"I am confident. I don't think the FCC has a strong case at all," attendee Sen. Ed Markey, D-Mass., told reporters afterward. "They walked away from regulating the way we communicate in the United States. It's irresponsible, and I don't think that it's going be well received in this court."

At the very least, Section 257 and the public safety issues "require a do-over," Benton Foundation counsel Andrew Schwartzman told us. "Two of the judges have very serious problems with the commission's defense," he said. "A fix isn't so easy."

Others who attended oral argument or listened via streaming told us the commission may face a remand on the emergency communications issues that so engaged the judges, but parts of the current rules may stand. All involved in the litigation with whom we spoke, no matter their side, saw reason for optimism for their stances. Many estimated a higher likelihood the D.C. Circuit at least upholds broadband as Title I, though others disagreed. How the three judges decide on state pre-emption was also an open question to some.

Competitive Enterprise Institute attorney Devin Watkins thinks there's a chance "they’re going to be unanimous to say that it’s up to the agency to decide whether it's Title I or Title II." Because of Brand X, "I would be shocked if the court says that they can’t" deem fast-web delivery an information service. It didn't seem like the panel wanted to reverse past D.C. Circuit rulings on net neutrality, said Watkins, whose group backs the current rules.

Technology Policy Institute lawyer-economist Sarah Oh had expected the court to spend more time on the order's administrative and process aspects, possibly signaling the regulator could partly lose. "As a matter of law, it seems the FCC was on firm ground" based on the argument, said Oh, who filed economists' concerns about the now-junked Title II rules.

Those optimistic after the lengthy hearing included CCIA Policy Counsel John Howes; Mozilla Vice President-Global Policy Trust and Security Alan Davidson; and Center for Democracy & Technology General Counsel Lisa Hayes. Many deemed themselves "cautiously optimistic" much of the current rules will be tossed or returned to the agency for reworking. Hayes is "feeling more optimistic" than some who think the FCC could largely win, and observed skepticism from judges during much of the agency's argument time. "The judges were not quite ... convinced" by the agency’s case given some of their questions, she said.

Davidson found telling the FCC's "inability to really articulate an answer" about why telecom is different from broadband service during that line of questioning. "There was some healthy skepticism about some core parts of their argument," he added. Howes thought the hearing pointed to flaws in the regulator's argument. CCIA CEO Ed Black said it "was a thorough discussion and as a result, the quality of the arguments on our side were shown to be the most persuasive."

On the Hill

Markey, meanwhile, confirmed he plans to “soon” file a net neutrality bill to be a “legislative marker” for Democrats' position on the issue. Markey declined to outline any details of his bill when asked by reporters Thursday.

The legislation is expected to include language that would restore Title II classification and the broad contours of the 2015 rules (see 1901290032). Markey is courting fellow senators to co-sponsor his bill, which has the backing of more than 30 Democrats, lobbyists said.

House Commerce Committee Chairman Frank Pallone, D-N.J., said committee Democrats plan to pursue “legislation that would … repeal the repeal” of the 2015 rules soon after a “couple hearings” on net neutrality issues. The House Communications Subcommittee set its first hearing on the issue in this Congress for Thursday (see 1901310035). Democrats are considering possible legislation to restore the 2015 rules via statute (see 1901100001). Opponents of the past rules argue ISPs “haven't really done anything to violate net neutrality even" with deregulation, “but they can, and we don't want them to be able to,” Pallone said during a Q&A.

Rep. Anna Eshoo, D-Calif., also marked the arguments. She cited the amicus brief she, Markey and other members filed last year “supporting net neutrality principles” and in opposition to “irresponsible repeal" (see 1808280054).

Starks Statement

Geoffrey Starks, in his second statement as FCC commissioner, sided with backers of the previous net neutrality rules. "This FCC is attempting to explain why it ignored the evidence before it and hastily abandoned the carefully crafted, common sense ... framework established in 2015," he said. "Consumers cannot count on the goodwill of big business to protect their interests." He hopes "these critical consumer protections will soon be restored." Commissioner Jessica Rosenworcel, who observed oral argument, said that "there was no shortage of complex issues." Starks declined an interview request and Rosenworcel didn't comment.

FCC officials siding with the deregulatory order tweeted in support of the current rules. "Internet speeds in the U.S. are faster than" ever, noted Commissioner Brendan Carr. "Construction crews are deploying new broadband infrastructure at a record clip. And more people have access to high-speed broadband than ever before." Sharing similar sentiments, Policy Adviser to FCC Chairman Ajit Pai Nathan Leamer said, "the Internet is flourishing as never before," "innovations are becoming reality" and "we are just getting started."

Tech and others drew some opposition for their stances. Twitter joins "@Mozilla, our industry peers, and public interest groups in supporting #NetNeutrality in the DC Circuit," it tweeted. Leamer asked if "anyone else see[s] the irony here." He and the company didn't comment further. Internet Association CEO Michael Beckerman said IA and "member companies are as committed as ever to ensuring all Americans enjoy strong, enforceable net neutrality protections, whether it be through the courts or bipartisan legislation.”

USTelecom is confident post-hearing the D.C. Circuit will uphold the deregulation, said CEO Jonathan Spalter. "The Order is consistent with Supreme Court precedent. Only two years ago the court said it would leave the decision of internet service classification to the expert agency -- a precedent we believe it should follow.” The association and others we queried that support the rules didn't want their lawyers to be interviewed.